A former senior Age executive has broken his silence over the sales and marketing tactics that he helped mastermind, claiming he achieved record increases to The Sunday Age‘s circulation by extending the newspaper’s controversial “education” scheme to the weekend.

Antony Catalano, The Age‘s circulation director from 2005 to 2008 who is currently involved in a pitched battle with Fairfax for control of Melbourne’s eastern suburbs real estate advertising market, told Crikey he rolled out the weekend deals and also approached the St Kilda football club to send thousands of cheap or free copies of The Sunday Age into members’ homes.

“The education deals pre-date me in the role but were extended to include the weekend under my time which explains why Sunday’s circulation rocketed,” Catalano said. He refused to comment on the St Kilda scheme, but Crikey understands 11,000 subscriptions were gifted to members in 2006.

The St Kilda figure remained hidden under official Audit Bureau of Circulations definitions because members could technically “opt out” of the deal via a tick box on renewal forms. When the free offer was withdrawn and a notional price attached, the number dropped to 6,500. Due to a loophole in the ABC’s definitions, the number of newspapers going through both the education and St Kilda channels were never disclosed.

The strategies achieved immediate dividends. Between September 2006 and June 2008, The Sunday Age‘s official circulation jumped by 10%, from 207,000 to 227,500. In May 2007, The Age informed shareholders that “circulation is growing strongly on all days of the week, weekday readership is at a 13-year high, and The Sunday Age is the fastest growing Sunday newspaper in Australia with its highest readership ever”.

Prior to Catalano’s ascension, teachers and students could only access the cheap scheme through newspapers bulk-delivered to schools and university campuses during the week. But the introduction of weekend home delivery in March 2006 bolstered The Sunday Age and helped stem the Saturday Age‘s circulation freefall.

Last week, Crikey published an internal email from a Fairfax sales executive, who is still with the company, showing that by 2007 the number of copies of the weekday Age sent to teachers and students had reached 20% of its circulation, or “40,000” copies, with further documents showing that on some days the number was over 47,000. According to the executive, if the number was ever made public, Fairfax would have to “write down” the value of its advertising by the same amount.

“We would make the total volume of copies going through these channels a matter of public knowledge … we would effectively write down the value of advertising in weekday editions from 200,000 circulation to 160,000 circulation, causing a pretty hard sell for the advertising team,” the executive wrote.

Advertisers contacted by Crikey last week were angered by the revelations, saying negotiations over rates would be affected in the future.

Under current ABC guidelines, The Age — and other Australian newspapers — are not required to publicly disclose their actual education figures because the subscriptions are technically deals with individuals rather than institutions. Names and addresses are collected from subscribers and entered into Fairfax databases, and then — in The Age‘s case –presented to auditors who forward the data to the ABC.

In the latest audit period ending in the three months to June, The Age claimed that just 0.36% of its average Monday-Friday circulation of 197,500, or 711 copies, of its daily circulation under the heading “education”. On Saturday, the paper claimed  just 0.04%, or 112 educational copies out of a total circulation of 279,900. On Sunday the figure was 1,639 copies, or 0.73% of its 224,600 circulation.

Catalano strenuously defended himself and his former employer against any suggestions of malfeasance:

“Anyone that suggests that The Age would have fiddled with those numbers is kidding themselves. We absolutely operated within the definition of the rules. But if you can work them in your favour, you work them in your favour. When we were given the new rules in 2006 which had supposedly taken 18 months to draft, finding holes in them became office sport.

“The real issue is whether advertisers are getting what they pay for.”

In May, Catalano launched real estate and lifestyle glossy The Weekly Review to compete with Fairfax’s Melbourne Weekly. In that time, he has ripped a $30 million revenue hole in his former employer’s coffers. He denied he was running a vendetta against Fairfax:

“Business is business. We’re competing fairly and honestly for the advertising dollar. The allegations relating to alleged misleading circulation data implicates me as well and I will strenuously defend myself and The Age from any suggestions that those numbers were fiddled.”

The education strategy is well known inside The Age. An internal promotional document, also obtained by Crikey, indicates that least 67 senior Age staff members were aware of it. The “2008 Education subscription pre-order campaign“, marked “for internal use only”, aims to “maintain current Education subscription levels” and targets 30,000 “Victorian primary and secondary teachers, librarians, coordinators and principals”.

Following Crikey‘s revelations last week, ABC chief Paul Dovas told The Australian he would launch an investigation into the allegations. But in a comment thread on industry website Mumbrella he suggests the response would be tepid at best: “While the emails you have cited warrant further attention, they by no means provide sufficient evidence to implicate the publisher, newsagents nor Victorian learning institutions in a ’scheme’ to take advantage of a ‘loophole’ in the ABC Rules.”

Both publishers and advertisers are represented on the ABC’s general decision making committee but publishers command a majority. Fairfax has four representatives.

Mediacom Managing Director Phil Phelan, who oversees an annual advertising spend of tens of millions of dollars, told Crikey that while Roy Morgan or Ipsos readership data was the “key arbiter” in terms of advertising spend, the circulation issue was about “transparency”.

“It seems The Age may have misrepresented or wasn’t required to tell people about the education copies. Confidence around newspapers is important,” he said.

Phelan said he supported any measure that required the ABC education definition to be changed so it is “more transparent and easily understandable”.

Age CEO Don Churchill defended his masthead when contacted by Crikey: “Mr Catalano is a former employee of Fairfax and The Age, who has set up a competing business, and it would be no surprise that he might express opinions that would serve those business interests. However, it serves no useful purpose to engage in a debate over internal Age matters, except to say that The Age is completely satisfied that at all times its circulation sales and processes have complied fully with the rules and guidelines set down by the Audit Bureau of Circulations and that these are independently audited.”